1025.05 - Issued Financial Statement (Moscow Urban …...Profile of the Moscow Urban Renewal Agency ... and on February 21, 2019,selected Moscow Flatirons project submitted by Roderick

Moscow,Idaho

ForTheFiscalYearEndedSeptember,302019

Financial Statements

MOSCOW URBAN RENEWAL AGENCY, MOSCOW, IDAHO

TABLE OF CONTENTS

Page

INTRODUCTORY SECTIONLetter of Transmittal 3

FINANCIAL SECTION

INDEPENDENT AUDITOR’S REPORT 8

MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) 10

BASIC FINANCIAL STATEMENTS

GOVERNMENT-WIDE FINANCIAL STATEMENTSStatement of Net Position 18Statement of Activities 19

FUND FINANCIAL STATEMENTSBalance Sheet – Governmental Funds 20Statement of Revenues, Expenditures, and Changes in Fund Balances –

Governmental Funds 21Statement of Revenues, Expenditures, and Changes in Fund Balances –

Budget and Actual – Governmental Funds – General Fund 23Budget and Actual – Governmental Funds – Legacy Crossing District Fund 24

NOTES TO FINANCIAL STATEMENTS 25

SUPPLEMENTARY INFORMATIONIndependent Auditor's Report - Government Auditing Standards 37

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January 31, 2020

To the Moscow Urban Renewal Agency Board of Commissioners and Citizens of the City of Moscow:

We are pleased to submit to you the Audited Financial Statements for the Moscow Urban Renewal Agency (hereafter “the Agency”) for the fiscal year ended September 30, 2019.

Idaho State Law requires that all government development authorities submit audited financial statements to the entity that sponsored their corporate existence. For the Moscow Urban Renewal Agency, this entity is the City of Moscow. The statements must be presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards (GAAS).

This report consists of management’s representations concerning the finances of the Agency. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed both to protect the Agency’s assets from loss, theft, or misuse and to compile sufficient and reliable information for the preparation of the Agency’s financial statements. Because the cost of internal controls should not outweigh their benefits, internal controls have been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The Agency’s financial statements have been audited by Presnell Gage, PLLC, a company of certified public accountants. The independent auditor concluded, based on the audit, that there was a reasonable basis for rendering an unmodified opinion on the Agency’s financial statements for the fiscal year ended September 30, 2019.

The Management’s Discussion and Analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this Letter of Transmittal and the two should be read in conjunction.

Profile of the Moscow Urban Renewal Agency

The Agency was organized by the Moscow City Council in 1995 pursuant to resolution 95-08 in accordance with Idaho Urban Renewal Law, Ch. 20, Title 50, Idaho Code (the “Law”) and the Local Economic Development Act, Ch. 29, Title 50, Idaho Code (the “Act”). The Agency acts as an arm of the Idaho State government entirely separate and distinct from the City of Moscow as provided in Idaho Code Section 50-2006.

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The purpose of the Agency is to undertake urban renewal projects in areas designated by the City of Moscow to be deteriorating, and to undertake this rehabilitation, conservation, redevelopment, or a combination thereof, in the interest of the public health, safety, morals or welfare of the residents of the City of Moscow.

The Agency is comprised of seven Commissioners appointed by the Mayor, and confirmed by the City Council, with terms as specified by the Mayor, as authorized by Moscow City Council Resolution 2008-17. Membership is constituted as follows: Two (2) members of the Moscow City Council; One (1) member of the Latah County Commission; and, four (4) members from the citizenry at large. Terms are staggered in such a fashion that no more than three (3) expire in any given year. The Board of Commissioners elects the Chair, Vice-Chair and Secretary from the ranks of the Commission. TheTreasurer’s office may be filled by Commissioners or by staff appointments made by the Commission.

The Chair is the chief presiding officer of the Agency. The Chair executes all deeds, bonds, contracts,and other legal documents authorized by the Commission. Some of the Chair’s duties may be delegated by the Board of Commissions to the Agency’s Executive Director, who oversees the day-to-day operations of the Agency and carries out the policies of the Board.

The City of Moscow is responsible for defining the geographic boundaries and legal creation of all urban renewal districts within the City. The Legacy Crossing District was created in 2008. The Agency works with the City of Moscow and the private sector to remedy blight and to facilitate economic development within urban renewal districts. The Agency’s activities within urban renewal districts are directed by specific urban renewal plans adopted by the Moscow City Council. The Agency provides funding for these efforts through the use of tax increment financing.

When the City establishes a tax increment financing district, the value on the property within the district is frozen as of the year the district is established. The ad valorem taxes collected on the frozen or “base” value is paid to the various taxing entities providing services to that property. Any subsequentincrease in the value of property above the base is called the "increment" value and the tax revenue generated from the increment value is transferred to the Agency. These tax increment revenues are used by the Agency to pay for public improvements and other revitalization activities in that district. When the district closes (now up to 20 years from commencement) the increment value is added back to the base value on the tax rolls. This helps diversify and strengthen the economic bases of both the City and the County.

Though urban renewal is a separate item on property tax statements, local property owners pay the same amount of tax whether or not an urban renewal district is established in their area.

FACTORS AFFECTING FINANCIAL CONDITION

The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the Agency operates.

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Local Economy

Moscow is a city in northern Idaho, situated along the Washington/Idaho border. Moscow is the county seat and largest city in Latah County. Moscow is the home of the University of Idaho, the land grant institution and primary research university for the state, as well as the home of New Saint Andrews College. Eight miles west is Pullman, Washington, home of Washington State University, also a land grant institution.

Moscow is the principal city in the Moscow, Idaho, Micropolitan Statistical Area (McrSA), which includes Latah County. The City contains over 60 percent of the County's population and while the University of Idaho is the dominant employer in Moscow, the City also serves as an agricultural and commercial hub for the Palouse region. Moscow leads all cities in the Micropolitan Statistical Area (McrSA) in most measures of economic power, including population, income, employment, bank deposits, assessed valuation, office space, and college enrollment.

The 2018 population of the City was estimated at 25,766 (2018 U.S. Census est.), which places it as the 13th largest city in Idaho. The unemployment rate (not seasonally adjusted) for Latah County for September 2018 was 2.1 percent.

Long-term Financial Planning

Prior to the fourth Monday of March of the current year, the Latah County auditor notifies the Agency of the total taxable valuation of all the taxable property situated within the Legacy Crossing District for the preceding calendar year for the purpose of assisting the Agency to develop its annual budget.

In February 2018, the Latah County Assessor released its report on the Agency’s assessed valuation for fiscal year 2019 (tax year 2018). Total assessed valuation within the Legacy Crossing District increased by over 94 percent. The Agency’s tax increment revenue received in fiscal year 2019 was$443,686, or about 2 percent of the total assessed valuation increase.

A tax increment calculation error occurred for the Legacy Crossing District. Following the 2012 property tax assessment process, Latah County notified the Agency that after a review of the assessment process, a tax increment calculation error had been made in the Legacy Crossing District, and the Agency had been allocated too much assessed value. It has been determined that the Agency received an overpayment of $114,537 of property tax receipts over the previous three-year period. Pursuant to an agreement made between the Agency and Latah County, the overpayment will be repaid to Latah County on behalf of the affected taxing entities over a period beginning in FY2017 and ending in FY2029.

Major Fiscal Year Initiatives

Sixth and Jackson Property. The Agency owns a 0.84 acre property at the southwest corner of the intersection of Sixth and Jackson Streets in Moscow. The Agency’s primary focus is the redevelopment of the property through completion of environmental assessment/remediation and facilitating the construction of improvements in conformance with the Legacy Crossing Plan. In May of 2013, the Agency was awarded an EPA Hazardous Substances Cleanup Grant to fund the removal of soils to allow the property to be redeveloped.

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The active cleanup construction was completed in the fall of 2016 and the Agency received the Certificate of Completion and Covenant Not to Sue from the State of Idaho Department of Environmental Quality in April 2017. In response to an RFP issued in the fall of 2014, Sangria Downtown LLC was selected as the successful respondent, and in April of 2015, the Agency entered into an Exclusive Negotiation Agreement (ENA) with Sangria Downtown LLC. The goal of the ENA is to provide a process for negotiating a Disposition and Development Agreement (DDA) to formally document terms of transactions and responsibilities of the parties The DDA was approved by the Agency’s Board on October 26, 2017. In May of 2018, Sangria terminated the DDA due to increased construction costs that rendered their project infeasible. The Agency issued a second RFP in 2018 and on February 21, 2019, selected Moscow Flatirons project submitted by Roderick D. Olps for the property. It is expected that construction upon the property would begin in the fall of 2019 or spring of 2020.

Private Development PartnershipsThe Agency’s Board has partnered in over $40 million in private development projects to assist in funding the cost of needed public infrastructure, environmental remediation and roadway and access improvements through Owner Participation Agreements (OPA). Through the OPA, the Agency reimburses the developer for identified public improvements from increased property taxes that result from the private investment. In fiscal year 2019, the agency paid $66,253 in OPA developer reimbursements.

Contributions to Valuable Community ProjectsThe Agency contributed to several public projects in 2019, including a $15,000 contribution to the Highway 8 Pedestrian/Bike Underpass Project, and a $33,500 contribution to the Turnstone Flats Sidewalk Project.

Accounting System and Budget Control

The annual budget serves as the foundation for the Agency’s financial planning and control. The Agency’s Executive Director and Treasurer prepare the annual budget. The Agency must notify the Latah County clerk of the date, time, and location of the Agency’s budget hearing for the upcoming fiscal year no later than April 30 of each year. The Agency’s Board of Commissioners must adopt a prospective budget prior to the scheduled public hearing. Legal notice of the proposed budget and budget hearing must be published twice, at least seven (7) days apart in the official newspaper. The final budget document must be adopted and published by September 30 of each year.

The planning of the budget, proposed presentation, public hearing notices, public hearing, adoption and submission to Latah County is outlined in the annual budget calendar each year ensuring all legal compliance and disclosure. The Agency’s adopted budget threshold is the Agency’s total balance of revenues and expenditures. The Agency may amend the current year's budget at any time during the fiscal year so long as it follows the same public hearing requirements needed for the budget's original certification. Amendments to the budget are occasionally necessary for unanticipated revenues.

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Awards and Acknowledgements

We would like to commend the City of Moscow staff for their efficient and dedicated service in helping to prepare this report. We also wish to thank Steve McGeehan, Chairman, and the Board of Commissioners for their support in planning and conducting the financial operations of the Agency in a responsible and progressive manner. Credit must also be given to the Agency’s auditors, Presnell Gage, PLLC, for their most valuable assistance in preparation of this report.

Respectfully submitted,

_____________________ ______________________Bill J. Belknap Renee TackExecutive Director Agency Treasurer

609 South Washington, Suite 202Moscow, Idaho 83843

www.presnellgage.com

(208) 882-2211

Fax: (208) 883-3808

Lewiston Office: 1216 Idaho Street, Lewiston, Idaho 83501, (208) 746-8281Grangeville Office: 109 South Mill Street, Grangeville, Idaho 83530, (208) 983-1254

Orofino Office: 216 Johnson Avenue, P.O. Box 632, Orofino, Idaho 83544, (208) 476-3012Pullman Office: 1230 SE Bishop Blvd., Pullman, Washington 99163, (509) 332-6541

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INDEPENDENT AUDITOR’S REPORT

Board of CommissionersMoscow Urban Renewal AgencyMoscow, Idaho

Report of the Financial Statements

We have audited the accompanying financial statements of the governmental activities and each major fund of the Moscow Urban Renewal Agency, a component-unit of the City of Moscow, Idaho, as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the Agency’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities and each major fund of the Moscow Urban Renewal Agency as of September 30, 2019, and the respective changes in financial position thereof for the year then ended in accordance with accounting principles generally accepted in the United Statesof America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management’s Discussion and Analysis and budgetary comparison information on pages 10 through 17and 23 through 24, respectively, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Moscow Urban Renewal Agency, a component-unit of the City of Moscow, Idaho’s basic financial statements. The introductory section is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The introductory sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated January 31, 2020, on our consideration of the Moscow Urban Renewal Agency’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, grant agreements, and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Moscow Urban Renewal Agency’s internal control over financial reporting and compliance.

January 31, 2020

Nick Nicholson

Presnell Gage


MANAGEMENT’S DISCUSSION AND ANALYSIS

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This section offers readers an overview and analysis of the fiscal year 2018 financial activities of the Moscow Urban Renewal Agency (hereafter “the Agency”) of the City of Moscow, Idaho. It should be read in conjunction with the Agency’s audited financial statements, which follow this section.

2019 FINANCIAL HIGHLIGHTS

The Agency’s total net position was $1,496,053. The Agency’s liabilities at September 30, 2019, were $409,535. The Agency’s total year-end fund balances were $1,204,670. The property tax revenue generated from within the Legacy Crossing District, was $443,686, an

increase of over 94 percent resulting from the completion and assessment of a number of recent projects in the District that added over $8.4 Million in assessed valuation growth. Property tax increment revenues are calculated on the change in property valuations as assessed by the Latah County Assessor.

OVERVIEW OF THE FINANCIAL STATEMENTS

The Agency’s annual financial report consists of several sections. Taken together, they provide a comprehensive overview of the Agency’s activities. The sections of the report are as follows:

Management’s Discussion and Analysis. This section of the report provides financial highlights, overview, and economic factors affecting the Agency.

Basic Financial Statements. This section includes the Agency-wide financial statements, fund financial statements, and notes to the financial statements. Agency-wide financial statements consist of the statement of net position and the statement of activities and utilize the accrual basis of accounting. The statements are intended to be more business-oriented and assist in assessing the operational accountability of the entity. The fund financial statements are similar to the Agency-wide statements,however, they use the modified accrual basis of accounting and focus on the fiscal accountability of the entity.

Agency-Wide Statements

The statement of net position found on page 18 focuses on resources available for future operations. This statement presents a snapshot view of the assets the Agency owns, the liabilities it owes and the net difference. The net difference is further separated into amounts indicating the agency’s assets, net of debt, restricted for debt service, and unrestricted amounts.

The statement of activities found on page 19 focuses on gross and net costs of the Agency’s programs and the extent to which such programs rely upon property tax and other revenues. This statement summarizes and simplifies the user’s analysis to determine the extent to which programs are self-supporting and/or subsidized by general revenues.

Fund Financial Statements

The balance sheet located on page 20 is similar to the statement of net position; however, the balance sheet omits long-term assets and long-term liabilities. This format helps assess current assets, which are available to meet current liabilities and debt service payments. Also, there is a reconciliation of the balance sheet and the statement of net position, which outlines why there are differences in the two statements.



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There are three statements of revenues, expenditures, and changes in fund balances on pages 21, 23, and 24. The statement on page 22 reconciles the differences to the Agency-wide statement of activities. The statements on page 23-24 have the budget-to-actual revenues and expenditures for the year for the General fund and Legacy Agency, respectively, and help in assessing whether the Agency raised and spent funds according to the budget plan.

Notes to the Basic Financial Statements

The notes to the financial statements provide additional disclosures required by governmental accounting standards and provide information to assist the reader in understanding the Agency’s financial condition.

Report by the Independent Certified Public Accountants

The report by the independent certified public accountants includes supplemental communication on the Agency’s compliance and internal controls as required by Idaho statutes.

MAJOR AGENCY INITIATIVES IN FISCAL YEAR 2019

Legacy Crossing District. The Agency owns a lot located at the southwest corner of the intersection of 6th and Jackson Streets in Moscow, within the Legacy Crossing District. The Agency’s primary focus is the redevelopment of the property through the completion of environmental assessment/remediation and facilitating the construction of improvements in conformance with the Legacy Crossing Plan. The 6th and Jackson property is one of the beneficiaries of an EPA Brownfield Assessment Grant and has underwenttesting throughout in 2014 to develop a remediation plan to remove contaminated soils in order to prepare the property for redevelopment.

On May 29, 2013, the Agency was awarded an EPA Hazardous Substances Cleanup Grant to fund the removal of the contaminated soils. The active cleanup construction was completed in the fall of 2016 and the Agency received the Certificate of Completion and Covenant Not to Sue from the State of Idaho Department of Environmental Quality in April 2017.

In response to a Request for Proposals (RFP) for the property, Sangria Downtown LLC, was selected as the successful respondent and on October 26, 2017, a Disposition and Development Agreement (DDA) to formally document terms of transaction and responsibilities of the parties was approved by the Board. In May of 2018 Sangria terminated the DDA due to increased construction costs that rendered their project infeasible. The Agency issued a second RFP in 2018 and on February 21, 2019, selected Moscow Flatirons project submitted by Roderick D. Olps for the property. It is expected that construction upon the property would begin in the fall of 2019 or spring of 2020.

On October 1, 2018, the Moscow City Council passed Ordinance 2018-13 approving the amendment to the Legacy Crossing District Boundary to include the adjacent portion of Main Street through the adoption of the Amended and Restated Legacy Crossing Urban Renewal District Redevelopment Plan. Under state law, any such amendment becomes retroactively effective to January 1 of the year the amendment occurred. The District amendment, resulting in the addition of 6 acres of land to the District bringing the total District size to approximately 169 Acres. The purpose of the amendment was to allow the opportunity for the Agency to financially participate in the reconstruction and repair of the deteriorating public infrastructure in downtown, which has been identified as a major challenge area by the Moscow City Council.



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As part of the creation of the Legacy Crossing District, all the parcels were given a base value premised on the 2008 property values. Assessed values above the 2008 base for those parcels benefit the District. Once the Area is established, a tax code area is created that identifies those taxing entities levying taxes within the Area. Beginning in 2009, any increase in the properties assessed values times the levies, generates tax increment revenue for the District. The assessment process utilized by the County for three subsequent years (from the base year of 2008) used certain software developed and provided by the Idaho State Tax Commission. It was determined that the software during this three-year period of time experienced a “glitch” that needed to be manually overridden by the Latah County Assessor’s office in order to have prevented an over allocation of value. The Agency has no part of the assessment process or establishment of the various tax levies.

Following the 2012 property tax assessment process, the County contended that the Agency received an over payment of $114,537 of property tax receipts over the three-year period. A settlement agreement between the Agency and Latah County was reached to provide for a schedule of repayment of the property taxes. The remaining balance at September 30, 2019, was $98,037.

Alturas Technology Park. Following the recommendation of Resolution 2015-02 to terminate the Alturas Technology Park revenue allocation area, the Moscow City Council passed Ordinance 2015-15 terminating the Alturas revenue allocation area in 2015.

The Agency continues to hold six undeveloped lots within the Alturas Technology Park. As real estate market conditions continue to improve, the Agency continues to market the remaining six lots in the Alturas Technology Park District targeting markets like agribusiness, biotechnology, software/IT, institutes and associations, and young technology professionals. Towards that end, the Agency has entered into an agreement with Palouse Commercial Real Estate for real estate brokerage services to assist the Agency with the marketing and sale of the remaining lots. There are a limited number of existing commercial properties available in Moscow for companies to choose from and most would require a substantial reinvestment. So, as national and economic conditions continue to improve, the Agency anticipates greater interest in the Agency’s lots in Alturas Technology Park.



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GOVERNMENT-WIDE FINANCIAL ANALYSIS

Trends in the Urban Renewal Agency’s Net Position

2019 2018 2017

Assets

Current and other assets $ 694,912 $ 432,070 $ 603,758

Capital assets (net of accumulated depreciation) 1,210,676 1,210,676 1,210,676

Total assets 1,905,588 1,642,746 1,814,434

Deferred outflows of resources 0 0 0

Liabilities

Current liabilities 55,998 75,726 158,549

Long-term liabilities 353,537 388,037 420,537

Total liabilities 409,535 463,763 579,086

Deferred inflows of resources 0 0 0

Net position

Net investment in capital assets 433,732 404,732 376,732

Restricted debt service 44,312 44,312 44,312

Unrestricted 1,018,009 729,939 814,304

Total net position $ 1,496,053 $ 1,178,983 $ 1,235,348

The Agency’s total assets and deferred outflows of resources for 2019 exceeded its liabilities and deferred inflows of resources by $1,496,053. The total capital assets are $1,210,676 net of depreciation.The capital assets consist of land, infrastructure for water, sewer, curbs and sidewalks, street lighting, and paving.

Outstanding Debt. At the end of fiscal year 2019, the Agency had total outstanding bonded debt of $290,000 as noted on page 31. These bonds are limited obligations of the Agency for the Legacy Crossing District. Additional information on the Agency’s long-term debt can be found in Note 6 in the notes to the financial statements.



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Trends in the Urban Renewal Agency’s Changes in Net Position

2019 2018 2017

Revenues:

General revenues:

Property tax $ 443,686 $ 228,176 $ 179,343

Other revenues:

Investment Income 12,116 7.373 4,116

Disposal of Asset (loss) 0 0 0

Grants and contributions 0 0 14,724

Total revenues 455,802 235,549 198,183

Expenditures:

Project administration 127,228 278,757 256,316

Depreciation 0 0 0

Interest Expense 11,504 13,157 14,536

Total expenditures 138,732 291,914 270,852

Change in net position 317,070 (56,365) (72,669)

Net position, beginning 1,178,983 1,235,348 1,308,017

Net position, ending $ 1,496,053 $ 1,178,983 $ 1,235,348

The increase in investment income reflects changes in the market value of investment bonds held by the Agency, and fluctuations in the interest rates effective during the fiscal year. The decrease in project administration expenses is due to significantly lower development participation over the reporting period as many recent projects were completed and several others were delayed. The Agency implements all Governmental Accounting Standards Board (GASB) pronouncements so that we are in compliance with the accounting standards for governments. Additional information comparing the Agency’s budgeted to actual expenditures can be found in the statement of revenues, expenditures, and changes in fund balances on pages 23 and 24.



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FUND FINANCIAL ANALYSIS

Trends in the Urban Renewal Agency’s Balance Sheet

2019 2018 2017

ASSETS

Cash and investments $ 687,058 $ 422,403 $ 596,073

Accounts receivable 2,594 4,407 2,425

Other assets 5,260 5,260 5,260

Land held for sale 531,256 531,256 531,256

Total assets 1,226,168 963,326 1,135,014

DEFERRED OUTFLOWS OF RESOURCES 0 0 0

Total assets and deferred outflows orresources $ 1,226,168 $ 963,326 $ 1,135,014

LIABILITIES $ 21,498 $ 43,226 $ 127,049

DEFERRED INFLOWS OF RESOURCES 0 0 0

Total liabilities and deferred inflows ofresources 21,498 43,226 127,049

FUND BALANCE

Nonspendable 531,256 531,256 531,256

Restricted 44,312 44,312 44,312

Assigned 552,485 280,031 375,013

Unassigned 76,617 64,501 57,384

Total fund balance 1,204,670 920,100 1,007,965

Total liabilities, deferred inflows of resources and fund balance $ 1,226,168 $ 963,326 $ 1,135,014

The decrease in liabilities is a result of decreased accounts payable due to timing of year-end invoices.Accumulated funding has also been set aside for improvements to the Agency’s lot located at the southwest corner of the intersection of Sixth and Jackson Street, which have been carried forward while the Agency continues the pursuit of the sale of this property. The $44,312 of restricted fund balance represents the required bond reserve account balance for the Legacy Crossing District bond.



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ECONOMIC CONDITIONS AFFECTING THE AGENCY

Moscow’s major employers are heavily represented in the sectors of education, health care, retail, andgovernment. These four sectors represent 65 percent of Moscow’s economy. The Latah Countyunemployment rate (not seasonally adjusted) for the month ending in September 2019 was 2.1 percentcompared with 1.8 percent in September 2018. The September 2019 unemployment rate (not seasonallyadjusted) of 2.1 percent was below a state unemployment rate of 2.9 percent and a nationalunemployment rate of 3.5 percent.(1)

Latah County saw employment expansion in the following sectors from 2018 – 2019: (1)

Utilities (16.7 percent) Wholesale Trade (8.2 percent) Professional and Technical Services (6.6 percent) Construction (9.2 percent) Other Services (0.3 percent) Arts, Entertainment, and Recreation (12.6 percent) Health Care and Social Services (3.5 percent) Government and Government Services (1.7 percent) Real Estate and Leasing (5.3 percent) Educational Services (20.2 percent) Transportation and Warehousing (5.6 percent)

Latah County saw employment contraction in the following sectors: (1)

Accommodation and Food Service (-2.6 percent) Finance and Insurance (-1.4 percent) Manufacturing (-0.8 percent) Retail Trade (-4.5 percent)

Real Estate: (2)

The average home sale price in the City of Moscow increased 15.5 percent from $242,281 in2018 to $279,866 in 2019, after a 5.9 percent increase the prior year.

The average home sale price in Latah County increased 24.6 percent from $219,873 in 2018 to$274,068 in 2019 after a 0.6 percent decrease the prior year.

Tourism: (3)

In the 2019 State of Idaho fiscal year, Latah County transient occupancy tax increased by 11.3percent over the prior period in 2018.

Building Permits: (4)

Total permitted construction value in the City of Moscow decreased slightly from $34.8 million in2018 to $21.9 million in 2019, slightly below the 10-year average of $25.6 million.

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1U.S. Bureau of Labor Statistics

2 Latah County MLS

3 Idaho Department of Commerce, Tourism Department

4 City of Moscow Community Development Department.



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Urban Renewal and Tax Increment Financing (TIF). The State of Idaho offers few financial incentives for economic development. Urban renewal and tax increment financing is one of the few economic development tools available to local governments in Idaho.

As an urban renewal agency, the Agency receives tax increment revenues calculated on the assessed value over the frozen base, which is set at the time of creation of an urban renewal district. When the Agency completes public improvements in association with an urban renewal plan, the Agency is investing in the local community and economy helping to increase property values and economic activity in the community. Because states are cutting or delaying aid to local governments in significant numbers, transferring costs from themselves to their cities, counties, and K-12 schools, and in some cases additionally passing laws that limit the local government’s ability to raise taxes, urban renewal and tax increment financing are vital economic development programs in Idaho.

The Alturas Technology Park District revenue allocation area was closed in the 2015 fiscal year. As a result of the closure, the $22 million in increased property value that has occurred as a result of the Agency’s investment in Alturas will be available to the taxing districts and will continue to provide long-lasting economic benefit to the City of Moscow and the region. Building on the success of the Alturas Technology Park District, the Legacy Crossing District was created in 2008 to provide a vision and direction for the redevelopment of an obsolete railroad corridor adjacent to downtown Moscow, and to increase economic opportunities for the community.

The Legacy Crossing District will have long-term positive impacts on the community and the Agency’s financial status. The re-urbanization of inner-city districts, particularly those with land uses transitioning from industrial uses to mixed-uses, requires an extended planning horizon. Redevelopment activities continue on the Agency-owned property located at the southwest corner of the intersection of Sixth and Jackson Streets, including the completion of environmental remediation activities and review andselection of current proposals for redevelopment projects on the site.

FINANCIAL CONTACT

This financial report is designed to provide a general overview of the Agency’s finances. Questions concerning any of the information provided in this report, or requests for additional financial information, should be addressed to the Moscow Urban Renewal Agency Treasurer, P.O. Box 9203, Moscow, Idaho,83843.

GovernmentalActivities

ASSETS

Cash and investments 687,058$ Receivables 2,594 Land held for sale 531,256Other assets 5,260Land 679,420

Total assets 1,905,588

DEFERRED OUTFLOWS OF RESOURCES 0

LIABILITIES

Accounts payable 6,498Deposit payable 15,000Series 2010 Bond - due within one year 31,000 Latah County payback agreement - due within one year 3,500Series 2010 Bond - due after one year 259,000Latah County payback agreement - due after one year 94,537

Total liabilities 409,535

DEFERRED INFLOWS OF RESOURCES 0

NET POSITION

Net investment in capital assets 433,732Restricted

Debt service 44,312Unrestricted 1,018,009

Total net position 1,496,053$


STATEMENT OF NET POSITIONSeptember 30, 2019

See accompanying notes18

Net Revenue(Expense) and

Program Changes in Revenues Net Position

OperatingGrants and Governmental

Expenses Contributions Activities

GOVERNMENTAL ACTIVITIES

Project administration 127,228$ (127,228)$ Interest expense 11,504 (11,504)

Total governmental activities 138,732$ 0$ (138,732)

GENERAL REVENUESProperty taxes levied for general purposes 443,686Investment income 12,116

Total general revenues 455,802

Change in net position 317,070

NET POSITION, beginning of year 1,178,983

NET POSITION, end of year 1,496,053$


STATEMENT OF ACTIVITIESYear Ended September 30, 2019


Legacy

Crossing

General District Total

ASSETS

Cash and investments 97,008$ 590,050$ 687,058$

Receivables 1,107 1,487 2,594

Other assets 5,260 5,260

Land held for sale 531,256 531,256

Total assets 629,371 596,797 1,226,168

DEFERRED OUTFLOWS OF RESOURCES 0 0 0

Total assets and deferredoutflows of resources 629,371$ 596,797$ 1,226,168$

LIABILITIES

Accounts payable 6,498$ 6,498$

Deposit payable 15,000 15,000

Total liabilities 21,498 0$ 21,498

DEFERRED INFLOWS OF RESOURCES 0 0 0

FUND BALANCE

Nonspendable 531,256 531,256

Restricted for debt service 44,312 44,312

Assigned 552,485 552,485

Unassigned 76,617 76,617

Total fund balance 607,873 596,797 1,204,670

Total liabilities, deferred inflowsof resources, and fund balance 629,371$ 596,797$ 1,226,168$

RECONCILIATION OF THE STATEMENT OF NET POSITION TO THE BALANCE SHEET -

GOVERNMENTAL FUNDS

Total fund balance - Governmental Funds 1,204,670$

Amounts reported for governmental activities in the statement

of net position are different because:

Capital assets used in governmental activities are financial

resources and, therefore, are not reported in the funds 679,420

Long-term liabilities, consisting of bonds payable and tax

repayment agreement, are due and payable in the current

period and, therefore, are not reported in the funds (388,037)

Total net position - Governmental Activities 1,496,053$


BALANCE SHEET - GOVERNMENTAL FUNDSSeptember 30, 2019


Legacy

CrossingGeneral District Total

REVENUESProperty taxes 443,686$ 443,686$ Investment income 12,116$ 12,116

Total revenues 12,116 443,686 455,802

EXPENDITURESCurrent

Legal and professional fees 6,099 4,600 10,699Insurance 1,582 1,582Maintenance 2,686 2,686Advertising 226 226Management services 49,173 49,173Land incentive agreement 22,069 22,069Development participation 37,448 37,448Other administration expenses 161 3,184 3,345

Debt ServicePrincipal retirement 32,500 32,500Interest 11,504 11,504


EXCESS (DEFICIENCY) OF REVENUESOVER EXPENDITURES (47,811) 332,381 284,570

OTHER FINANCING SOURCES (USES)Operating transfers 59,927 (59,927) 0

Total other financing sources (uses) 59,927 (59,927) 0

Net change in fund balances 12,116 272,454 284,570

FUND BALANCES AT BEGINNING OF YEAR 595,757 324,343 920,100

FUND BALANCES AT END OF YEAR 607,873$ 596,797$ 1,204,670$

Year Ended September 30, 2019


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES -GOVERNMENTAL FUNDS


Net change in fund balances - Governmental Funds 284,570$

Amounts reported for governmental activities in the statement of activities are different because:

The issuance of long-term debt (e.g. bonds, leases) provides current financial resourcesto governmental funds, while the repayment of the principal of long-term debt consumesthe current financial resources of governmental funds. Neither transaction, however, hasany effect on net position. Also, governmental funds report the effect of issuance costs,premiums, discounts, and similar items when debt is first issued, whereas these amountsare deferred and amortized in the statement of activities:

Principal payments made on long-term debt 32,500

Change in net position - Governmental Activities 317,070$

22

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RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO

Year Ended September 30, 2019THE STATEMENT OF ACTIVITIES

Budgeted Variance with

Amounts Final Budget

Original and Actual Positive

Final Amounts (Negative)

REVENUES

Investment income 1,500$ 12,116$ 10,616$

Total revenues 1,500 12,116 10,616

EXPENDITURES

Current

Legal and professional fees 12,000 6,099 5,901

Insurance 1,700 1,582 118

Maintenance 3,500 2,686 814

Advertising 1,000 226 774

Management services 49,173 49,173 0

Other administration expenses 138,210 161 138,049


EXCESS (DEFICIENCY) OF REVENUES

OVER EXPENDITURES (204,083) (47,811) 156,272

OTHER FINANCING SOURCES (USES)

Operating transfers 58,950 59,927 977

Total other financing sources (uses) 58,950 59,927 977

Net change in fund balances (145,133) 12,116 157,249

FUND BALANCES BEGINNING OF YEAR 145,133 595,757 450,624

FUND BALANCES END OF YEAR 0$ 607,873$ 607,873$


STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

GENERAL FUND


IN FUND BALANCES - BUDGET AND ACTUAL - GOVERNMENTAL FUNDS


Budgeted Variance with

Amounts Final Budget

Original and Actual Positive

Final Amounts (Negative)

REVENUES

Property taxes 325,000$ 443,686$ 118,686$

Total revenues 325,000 443,686 118,686

EXPENDITURES

Current

Legal and professional fees 36,800 4,600 32,200

Advertising 1,000 1,000

Land incentive agreement 86,367 22,069 64,298

Development participation 215,000 37,448 177,552

Other administration expenses 3,300 3,184 116

Debt service

Principal retirement 322,500 32,500 290,000

Interest 14,590 11,504 3,086

Contingency 15,000 15,000


EXCESS (DEFICIENCY) OF REVENUES

OVER EXPENDITURES (369,557) 332,381 701,938

OTHER FINANCING SOURCES (USES)

Proceeds from sale 150,000 (150,000)

Operating transfers (58,950) (59,927) (977)

Total other financing sources (uses) 91,050 (59,927) (150,977)

Net change in fund balances (278,507) 272,454 550,961

FUND BALANCES BEGINNING OF YEAR 278,507 324,343 45,836

FUND BALANCES END OF YEAR 0$ 596,797$ 596,797$



STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES

IN FUND BALANCES - BUDGET AND ACTUAL - GOVERNMENTAL FUNDS

LEGACY CROSSING DISTRICT FUND


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NOTES TO FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity. The Moscow Urban Renewal Agency (the “Agency”), a component unit of the City of Moscow, Idaho, was organized on June 19, 1995, under the Idaho Urban Renewal Law, Chapter 20, Title 50 of the Idaho Code. As such, the Agency acts as a legal entity, separate and distinct from the City of Moscow, even though members of the City Council also serve as members of the Agency’s governing board. However, the Agency is considered a component unit of the City of Moscow due to the oversight authority of the City Council.

The actions of the Agency are binding, and business, including the incurrence of long-term debt, is routinely transacted in the Agency’s name by its appointed representatives. The Agency is broadly empowered to engage in the general economic revitalization and redevelopment of the City through acquisition and development of property, public improvements, and revitalization activities in those areas of the City determined to be in a declining condition, which are in a redevelopment project area.

The Alturas Technology Park was the Agency’s first project. Phase I of the project wasconstructed during 1997 and 1998, and consists of six saleable lots and a public park.Construction of Phase II began in the fall of 2005. The Moscow Urban Renewal Agency closed the Alturas Technology Park Tax Allocation Area in 2016 and contributed public infrastructure capital assets to the City of Moscow.

During the fiscal year ended September 30, 2008, a central portion of the City of Moscow was declared a deteriorating area. A second urban renewal district was defined and named Legacy Crossing District. During the course of fiscal year 2007-2008, a plan was written, public comment was obtained, and a feasibility study conducted. The final Legacy Crossing Urban Renewal District plan was accepted by the City Council in June 2008 and filed as approved by the Idaho State Tax Commission in August 2008. During fiscal year 2009-2010, the Agency issued bonds to finance the purchase of the land relating to Legacy Crossing District.

Measurement Focus and Basis of Accounting. The financial statements of the Moscow Urban Renewal Agency have been prepared in accordance with accounting principles generally accepted in the United States of America as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard–setting body for establishing governmental accounting and financial reporting principles. The Agency uses the following two bases of accounting in these financial statements:

Economic Resources Measurement Focus and Accrual Basis of AccountingUnder this measurement focus, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place.

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1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Measurement Focus and Basis of Accounting (Continued).

Current Financial Resources Measurement Focus and Modified Accrual Basis of AccountingUnder this measurement focus, revenues are recognized when susceptible to accrual; i.e., both measurable and available. "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. The Agency considers revenues as available if they are collected within 60 days after year-end.

Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, claims and judgments, and compensated absences, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases are reported as other financing sources.

Restricted Resources. Program expenses are allocated to restricted program revenue first and then to the next highest level of net position/fund balance restrictions when both restricted and unrestricted resources are available.

Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions (GASB #54) defines the different types of fund balances that a governmental entity must use for financial reporting purposes. GASB #54 requires the fund balance amounts to be properly reported within one of the fund balance categories below:

NonspendableIncludes amounts that cannot be spent because they are either (1) not in spendable form or (2) legally or contractually required to be maintained intact.

RestrictedIncludes amounts that can be spent only for the specific purpose stipulated by external resource providers, constitutional provisions, or enabling legislation.

CommittedIncludes amounts that can only be used for the specific purposes determined by a formal action of the government’s highest level of decision-making authority.

AssignedIncludes amounts that are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed.

UnassignedResidual classification of fund balance that includes all spendable amounts that have not been restricted, committed, or assigned.

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Agency-Wide Financial Statements. The statement of net position and the statement of activities display information about the overall Agency. Eliminations have been made to minimize the double-counting of internal activities. These statements reflect only governmental activities of the Agency since there are no “business-type activities” within the Agency. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties.

The statement of activities presents a comparison between direct expenses and program revenues for the Agency’s sole function of economic development within the Agency boundaries.A function is an assembly of similar activities and may include portions of a fund or summarize more than one fund to capture the expenses and program revenues associated with a distinct functional activity. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) fees and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues.

Fund Financial Statements. The fund financial statements provide information about the Agency’s funds. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. The Agency has only governmental-type funds. Because there are only two funds, they are bothpresented on the face of the fund financial statements.

Basis of Presentation. The Agency uses the following governmental funds:

General Fund – This fund was created by the Agency, separate and apart from all other funds of the Agency, designated the “General Fund,” into which shall be deposited the excess interest revenues earned and incremental tax revenues received each year, after the provision has been made for payment of principal and interest on the bonds. The provision is determined by the Board and is sufficient to pay the costs of administration of the Agency for the fiscal year.

Legacy Crossing District Fund – This fund was created by the Agency as a special fund held by the Agency, separate and apart from all other funds of the Agency, designated the “Legacy Crossing District Fund." All incremental tax revenues relating to each individual project areashall be deposited promptly upon receipt by the Agency into the associated fund and shall be used only for the following purposes and in the following order of priority:

First, to pay the interest on the bonds and notes payable relating to the associated project. Second, to pay the principal of the bonds and notes payable relating to the associated

project. Third, to fund the general fund. Fourth, to fund construction in the project areas for plans as legally approved by the

Moscow Urban Renewal Agency Commission. Fifth, for any lawful purpose of the Agency.

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Use of Estimates. The Agency uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.Actual results could vary from the estimates that the Agency uses.

Budgets. As required by Idaho law, the Agency has adopted a budget, which is presented on the face of the financial statements.

Deposits and Investments. Cash is invested by the Agency until it is needed for the purpose of maximizing investment earnings. The investments are reported at fair value at September 30, 2019. The fair value is combined with the checking account balance and is presented as cash and investments.

Land Held for Sale. Land held for sale consists of properties purchased with the intent to sell the properties in the short-term. Land held for sale is stated at the lower of cost or fair market value. Land held for sale is not depreciated or amortized.

Capital Assets. Capital assets are long lived assets of the Agency as a whole. When purchased,such assets are recorded as expenditures in the governmental funds and capitalized. The Agency records all capital assets at their original cost. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized.

Capital assets consist of land relating to the Legacy Crossing District.

Long-Term Obligations. Long-term debt is recognized as a liability of a governmental fund when due or when resources have been accumulated for early payment in the following year. For other long-term obligations, only that portion expected to be financed from expendable available financial resources is reported as a fund liability.

Personnel. The Agency employs no personnel and, thus, has no liability disclosures for pension costs, employee compensated absence or payroll tax accruals. The Agency agrees to pay $49,173 to the City of Moscow for services provided through City Administration, Public Works, Finance, and Community Development departments. Additionally, the Agency retains an Executive Director whose duties and responsibilities are equally separated from the City’s Community Development Director. The Agency contracts with the City for the Executive Director’s services, as stipulated in the City Services Agreement between the City and the Agency.

2. PROPERTY TAXES

In accordance with Idaho law, property taxes are levied in dollars in September for each calendar year. Levies are made on or before the second Monday of September. One-half of the property taxes are due on or before December 20th, and the remaining one-half is due on or before June 20th of the following year. A lien is filed on property after three years from the date of delinquency.

29



2. PROPERTY TAXES (CONTINUED)

The Agency has no direct taxing power. The agency receives property taxes based upon the increase in assessed value of property caused by construction and growth in valuation since the base year. All taxing districts within the tax allocation area receive property tax revenue from their respective tax rate at the base year’s assessed value. The assessed property value of the Legacy Crossing District in the base years was $47,710,183. Each year since the base year, the assessed valuation has grown due to new construction, remodeling, or growth in value.

The increased valuation since the base year and the related property tax increment is listed as follows:

Valuation Tax

Tax Year Increase Revenue

2008 Base Year

2009 3,345,847$ 53,020$

2010 8,377,408 129,830

2011 8,958,913 144,052

2012 5,449,902 97,548

2013 5,757,256 116,809

2014 8,170,320 179,241

2015 8,760,571 179,552

2016 9,097,017 179,343

2017 11,903,272 228,980

2018 20,267,003 371,958

2019 42,649,716 (preliminary) 745,517 (estimated)

Legacy Crossing District

3. CASH AND INVESTMENTS

At September 30, 2019, the carrying amount of the Agency’s cash deposits was $15,730, and the bank balance was $41,270. The entire cash balance is FDIC insured.

As of September 30, 2019, the Agency had the following investments and maturities:

InterestLess than 1 1-5 Greater than 5 Rate Fair Value

Governmental Activities

Cash and equivalents 44,463$ 0.00 44,463$ Idaho State Treasurer's

Local GovernmentInvestment Pool 626,865 2.308 626,865 Total investments 671,328$ 0$ 0$ 671,328$

Interest rate risk: In accordance with its investment policy, the Agency manages its exposure to declines in fair values by limiting the weighted average maturity of its investment portfolio.

30



3. CASH AND INVESTMENTS (CONTINUED)

Credit risk: As of September 30, 2019, the Agency's investment in the Idaho State Treasurer's Local Government Investment Pool is unrated. The Agency’s investments held through Zions Bank are AAA rated by Moody’s Investor Service and are implicitly guaranteed by the U.S. government.

Concentration of credit risk: The Agency’s investment policy states that the Agency shall mitigate concentration risk by:

1. Limiting investments to avoid over concentration in securities from a specific issuer or business sector,

2. Limiting investment in securities that have higher credit risks,3. Investing in securities with varying maturities, and4. Continuously investing a portion of the portfolio in readily available funds such as the State

Treasurer’s Local Government Investment Pool, government-sponsored agencies, money market funds, or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations.

Custodial credit risk – investments: For an investment, this is the risk that, in the event of the failure of the counterparty, the Agency will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The Agency’s policies include investments approved by Idaho Code 50-1013, which limit custodial credit by purchasing marketable securities by an implied guarantee of the United States of America, and the Agency uses brokers that qualify under Securities & Exchange Commission Rule 15C3-1.

4. LAND HELD FOR SALE

As of September 30, 2019, land held for sale, which is stated at the lower of cost or fair value, consists of six lots within the Alturas Technology Park. It is intended that these lots be disposed of by way of sale and steps have been taken for this purpose. The value of these lots was $531,256at September 30, 2019.

31



5. CAPITAL ASSETS

Capital assets consist of land, infrastructure for water, sewer, curbs and sidewalks, street lighting,and paving. Activity for the year ended September 30, 2019, was as follows:

Beginning EndingBalance Balance10/01/18 Increases Decreases 09/30/19

Capital assets not being depreciatedLand 679,420$ $ 679,420

Total assets not being depreciated,net 679,420 679,420

Total assets being depreciated,net 0 0$ 0$ 0

Governmental activitiescapital assets, net $ 679,420 $ 0 $ 0 $ 679,420

6. LONG-TERM OBLIGATIONS

The following is a summary of debt transactions of the Agency for the fiscal year ended September 30, 2019:

Series 2010RevenueAllocation

Bond TotalDebt payable, 9/30/18 $ 319,000 $ 319,000 Principal payments (29,000) (29,000) Debt payable, 9/30/19 $ 290,000 $ 290,000

Debt outstanding at September 30, 2019, consisted of the following:

Revenue Allocation Bonds - Series 2010 - $510,000 Revenue Allocation (Tax Increment) Bonds due in annual installments, with an interest rate at September 30 of 5.44 percent.

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6. LONG-TERM OBLIGATIONS (CONTINUED)

At September 30, 2019, the annual debt service requirements to maturity, assuming current interest rates, are as follows:

Year EndingSeptember 30 Principal Interest

2020 $ 31,000 $ 13,057 2021 32,000 11,370 2022 34,000 9,965 2023 35,000 8,473 2024 37,000 6,936

2025-2027 121,000 10,756 $ 290,000 $ 60,557

Series 2010

Revenue Allocation Bonds are limited obligations of the Agency and are not general obligations of the Agency or the City of Moscow, Idaho. These bonds and other issued debt and the related interest are payable solely from property tax revenues from the designated project fund, reserve funds, and any unobligated funds of the Agency.

The total interest expense in 2019 amounted to $11,504 in the governmental funds.

The Agency also agreed to a long-term payback agreement with Latah County, Idaho, for the repayment of $114,537 of property taxes received in prior years (see note 8 for details). The payback agreement calls for annual installment payments over 15 years with no interest. At September 30, 2019, the annual required payments to Latah County are as follows:

Year Ending Tax RepaymentSeptember 30 Agreement

2020 $ 3,500 2021 5,000 2022 5,000 2023 5,000 2024 5,000

2025-2029 74,537 $ 98,037

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7. FUND BALANCE CLASSIFICATIONS

Nonspendable. Nonspendable fund balances represent amounts that cannot be spent because they are either (1) not in spendable form or (2) legally or contractually required to be maintained intact. The Agency’s nonspendable fund balance consists of land that is held for resale and is not considered to be in a spendable form.

Restricted. Restricted net position/fund balances represent amounts whose use is restricted by creditors, grantors, laws and regulations of other governments, or through enabling legislation.Restrictions for the Agency include resources of the Legacy Crossing District that are set aside for the specific purpose of satisfying debt service requirements set forth by the Agency’s individual bond related covenants.

Assigned. The fund balances classified as assigned are for use for specific purposes but do not rise to the level of restricted or committed. The Agency has assigned balances that include the activities of the special revenue fund.

Unassigned. The unassigned fund balance is in the general fund and has not been restricted, committed, or assigned to specific purposes within the general fund.

8. PROPERTY TAX REPAYMENT AGREEMENT

As part of the creation of the Legacy Crossing District, all the parcels were given a base value premised on the 2008 property values. Assessed values above the 2008 base for those parcels benefit the District. Once the Area is established, a tax code area is created that identifies those taxing entities levying taxes within the Area. Beginning in 2009, any increase in the properties’ assessed values times the levies, generates tax increment revenue for the District. The assessment process utilized by the County for three subsequent years from the base year of 2008 used certain software developed and provided by the Idaho State Tax Commission. It was determined that the software during this three-year period of time experienced a “glitch” that needed to be manually overridden by the Latah County Assessor’s office in order to haveprevented an over allocation of value. The Agency has no part of the assessment process or the establishment of the various tax levies.

Following the 2012 property tax assessment process, the County notified the Agency that after a review of the assessment process for the past three years, the District had been allocated too much assessed value. Disclosure note 2 on page 30 identifies these changes. The County determined that the Agency received an overpayment of $114,537 of property tax receipts over a three-year period. The remaining balance at September 30, 2019, was $98,037.

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9. COMMITMENTS AND CONTINGENCIES

On September 21, 2011, the Agency entered into an Owners Participation Agreement (OPA) with Anderson Group, LLC, the developer of 625 South Jackson Street – in the Agency’s Legacy District. The Agency’s financial participation is an anticipated amount not to exceed $110,000 of public improvements and site remediation, without interest. The OPA sets out conditions the developer must meet to become eligible for Agency financial participation. Payment will be made in semi-annual installments in the amount of 50 percent of the tax increment revenue generated from the additional assessed value resulting from the development completed by the developer. Payments will only occur upon receipt of tax increment revenue and will continue until the principal has been paid or December 31, 2032, whichever occurs first. Payments made during fiscal year 2019 totaled $963. As of September 30, 2019, a total of $1,054 has been paid to the developer.

On September 16, 2014, the Agency entered into an OPA with 409 S. Jackson St., LLC, the developer of 409 South Jackson Street – in the Agency’s Legacy District. The Agency’s financial participation is an anticipated amount not to exceed $45,000 of public improvements and site remediation, without interest. The OPA sets out conditions the developer must meet to become eligible for Agency financial participation. Payment will be made in semi-annual installments in the amount of 50 percent of the tax increment revenue generated from the additional assessed value resulting from the development completed by the developer. Payments will only occur upon receipt of tax increment revenue and will continue until the principal has been paid or December 31, 2024, whichever occurs first. Payments made during fiscal year 2019 totaled $8,876. At September 30, 2019, a total of $41,239 has been paid to the developer.

On October 6, 2016, the Agency entered into an OPA with Darold L. Bingham and Ann D. Bingham Living Trust, the developer of 402 West Sixth Street – in the Agency’s Legacy District. The Agency’s financial participation is an anticipated amount not to exceed $38,077 of public improvements and site remediation, without interest. The OPA sets out conditions the developer must meet to become eligible for Agency financial participation. Payment will be made in semi-annual installments in the amount of 50 percent of the tax increment revenue generated from the additional assessed value resulting from the development completed by the developer. Payments will only occur upon receipt of tax increment revenue and will continue until the principal has been paid or December 31, 2032, whichever occurs first. Payments made during fiscal year 2019 totaled $3,121. At September 30, 2019, a total of $25,366 has been paid to the developer.

On October 6, 2016, the Agency entered into an OPA with Larry A. Swanger, the developer of 203 West Third Street – in the Agency’s Legacy District. The Agency’s financial participation is an anticipated amount not to exceed $90,096 of public improvements related to the general condition and appearance of all Public Street and sidewalk infrastructure in the surrounding area, without interest. Payments made during fiscal year 2019 totaled $1,700. At September 30, 2019, a total of $47,007 has been paid to the developer.

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9. COMMITMENTS AND CONTINGENCIES (CONTINUED)

On January 18, 2018, the Agency entered into an OPA with Gritman Medical Park LLC, the developer of 700 South Main Street – in the Agency’s Legacy District. The Agency’s financial participation is an anticipated amount not to exceed $600,000 of public improvements related to the general condition and appearance of all public street and sidewalk infrastructure in the surrounding area, without interest. The OPA sets out conditions the developer must meet to become eligible for Agency financial participation. Payment will be made in semi-annual installments in the amount of 50 percent of the tax increment revenue generated from the additional assessed value resulting from the development completed by the developer. Payments will only occur upon receipt of tax increment revenue and will continue until the principal has been paid or December 31, 2032, whichever occurs first. Payments made during fiscal year 2019 totaled $7,409. At September 30, 2019, a total of $17,172 has been paid to the developer.

The Agency has negotiated the following future OPA agreements in the Legacy District in anticipated amounts not to exceed:

FH Vandals, LLC, developer of 1104 South Main Street $ 350,000

SUPPLEMENTARY INFORMATION

609 South Washington, Suite 202Moscow, Idaho 83843

www.presnellgage.com

(208) 882-2211

Fax: (208) 883-3808

Lewiston Office: 1216 Idaho Street, Lewiston, Idaho 83501, (208) 746-8281Grangeville Office: 109 South Mill Street, Grangeville, Idaho 83530, (208) 983-1254

Orofino Office: 216 Johnson Avenue, P.O. Box 632, Orofino, Idaho 83544, (208) 476-3012Pullman Office: 1230 SE Bishop Blvd., Pullman, Washington 99163, (509) 332-6541

37

INDEPENDENT AUDITOR'S REPORT - GOVERNMENT AUDITING STANDARDS

Board of CommissionersMoscow Urban Renewal AgencyMoscow, Idaho

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standardsissued by the Comptroller General of the United States, the financial statements of the governmental activities and each major fund of the Moscow Urban Renewal Agency as of and for the year ended September 30, 2019, and the related notes to the financial statements, which collectively comprise the Moscow Urban Renewal Agency’s basic financial statements, and have issued our report thereon dated January 31, 2020.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Moscow Urban Renewal Agency’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Moscow Urban Renewal Agency’s internal control. Accordingly, we do not express an opinion on the effectiveness of the Moscow Urban Renewal Agency’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses, or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

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Compliance and Other Matters

As part of obtaining reasonable assurance about whether the Moscow Urban Renewal Agency’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of the financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Agency’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Agency’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

January 31, 2020

Nick Nicholson

Presnell Gage

Documents

1025.05 - Issued Financial Statement (Moscow Urban …...Profile of the Moscow Urban Renewal Agency ... and on February 21, 2019,selected Moscow Flatirons project submitted by Roderick